Coinspeaker Coinbase Strikes Back, Sues SEC and FDIC over FOIA Violations
Typically, it’s the enforcement agencies that bring legal actions to the front yard of crypto firms. However, this time, the tables have turned. Leading US-based crypto exchange Coinbase has sued the US Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) for failing to comply with Freedom of Information Act (FOIA) requests. It seeks a court order to compel the agencies to release the requested information.
FOIA requests, under the Freedom of Information Act, are designed to allow the public access to records from federal agencies. In July 2023, Coinbase, with the help of History Associates Inc, submitted a FOIA request to the regulators, seeking their views on “Ethereum and the status of ETH”.
Blockchain software firm Consensys also raised a similar issue in its own lawsuit against the SEC in May, stating that the regulator approved a probe into “Ethereum 2.0” in March 2023 only to later drop the investigation later.
Moreover, History Associates also made FOIA requests for two closed cases: one involving Ether Delta creator Zachary Coburn and another involving startup Enigma MPC. Interestingly, both entities had settled with the regulator for alleged securities law violations.
Coinbase sought records related to any investigations on these cases. However, the SEC denied all these requests, despite the chagrin of the crypto space.
FDIC’s Denial
In November 2023, Coinbase submitted a FOIA request to the FDIC for copies of all “pause letters” sent to regulated financial institutions. These letters, sent from the FDIC’s Office of Inspector General in October 2023, urged institutions to “pause all crypto asset-related activities.”
According to the lawsuit, the regulatory body denied the FOIA request in January and again in May after History Associates appealed.
As a result, Coinbase filed two lawsuits in the US District Court for the District of Columbia on Thursday. The complaint accuses SEC and FDIC of using their regulatory powers to undermine the digital asset industry. It reads:
“For nearly two years, a wide array of federal financial regulators have used every regulatory tool at their disposal to try to cripple the digital-asset industry.”
Coinbase has a long history of fighting legal issues in the United States, being the firm crypto exchange to be publicly listed in the country. It sued the SEC back in April 2023, requesting a clear yes or no answer over requests for clear regulations for crypto. In return, the SEC filed a separate lawsuit against Coinbase, accusing the company of operating without proper registration.
The tug-of-war between the SEC and Coinbase has frustrated the community. Many states that the SEC’s approach amounts to “regulation by enforcement”. However, SEC Chair Gary Gensler maintains that most cryptocurrencies should be treated as securities and should be governed by the same laws as traditional investments.
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Coinbase Strikes Back, Sues SEC and FDIC over FOIA Violations